CMS Energy to Sell Pipeline Business

CMS Energy Corp. said Sunday that it had agreed to sell its natural gas pipeline business to Southern Union Co. and an investment fund for $662 million and the assumption of $1.17 billion in debt.

CMS Panhandle Cos. would be acquired by Southern Union Panhandle Corp., a new company established by Southern and AIG Highstar, an equity fund sponsored by American International Group Inc.

CMS Panhandle operates about 11,000 miles of natural gas pipeline from the Gulf of Mexico to the Midwest and Canada. The sale, which has been approved by the boards of all three companies, faces regulatory reviews.

“CMS Panhandle is a well-run and stable business, which will be accretive to our earnings in the first year,” said Thomas Karam, Southern Union’s president and chief operating officer. “We expect to execute a smooth and seamless transition.”

CMS Energy, based in Dearborn, Mich., said it would use the proceeds to accelerate debt reduction.

On Friday, CMS said it was selling its natural gas trading book’s contracts to Sempra Energy of Canada, a division of Sempra Energy. Sempra, based in San Diego, also is parent of Southern California Gas Co. and San Diego Gas & Electric Co.

CMS has been selling assets to reach a goal of raising $2.9 billion by year’s end. Last month, the company said it had raised $2.7 billion and reduced its debt by $860 million this year.

Southern Union of Wilkes-Barre, Pa., distributes natural gas to about 1.5 million customers in Missouri, Pennsylvania, Rhode Island, Massachusetts and Texas as well as in Mexico. Southern Union also generates electricity in Pennsylvania.

In trading Friday, CMS shares fell 4 cents to $8.61, Southern Union lost 70 cents to $15.40 and American International Group rose 98 cents to $59.07. All trade on the New York Stock Exchange.